At issue is the fact that the Zona Rosa was financed using bonds that were to be repaid with dedicated tax revenue from the development. But the project had the misfortune of opening in the middle of the Great Recession and has struggled with high vacancy rates for years. Tax revenue has consistently fallen short of expectations.

County officials argue that taxpayers shouldn't have to pick up the tab. But the downgrades, says Municipal Market Analytics’ Matt Fabian, are already costing taxpayers. That’s because it will now be more expensive for the county to borrow money the next time it issues general obligation bonds in the municipal market. And Platte County is also extremely unlikely to find future buyers for any revenue debt that depends on an annual appropriation from the government.

“It hardly seems worth it when just restructuring the debt could have been an easy fix,” says Fabian. “From an economic development perspective, you’re now a non-investment grade county walking away from a bond. It’s hard to talk companies into moving there if that’s your debt profile.”

An attorney for the county says restructuring didn’t appear to be an option when county commissioners met with the shopping center's owner and other parties about the payment shortfall. Instead, commissioners were told it was up to them to fork over the $1 million.

“There was a lot of chest-thumping going on," says the attorney, Todd P. Graves. "They believed there was a good chance they were going to be sued. The point was to call everybody’s bluff and say we’re not afraid of a lawsuit. Let’s get it over with so everyone has a clear understanding of our legal obligations."

Platte County appeared to be ready to step in -- the board had even appropriated in its current budget funds to make up for a shortfall -- but commissioners suddenly started questioning that commitment in August. Since then, Platte County and its Industrial Development Authority have both suffered multiple-notch downgrades on just the threat of default.

It’s not the first time public officials have opted to cease paying bondholders rather than billing taxpayers for unexpected costs. In 2014, the Buena Vista, Va., City Council voted to stop debt payments on a $10 million bond that financed a municipal golf course. In the fall of 2012, the Minneapolis suburb of Vadnais Heights stopped making bond payments on a $25 million sports complex and was punished with a downgrade.

Both cases are similar to Platte County’s in that the projects failed to deliver the expected revenue required to pay off the debt. And in most cases, the political leaders who approved the project financing were no longer around to vouch for it.

That sort of political risk is something that investors usually consider when buying the bonds, says Fabian. But the fact that Platte County is being downgraded even before an actual default signals that credit agencies are becoming increasingly aggressive about punishing localities for walking away from debt -- even when they are legally allowed to.

In other public finance news this week:

Retiree Health-Care Costs Getting Worse

Retiree health-care liabilities are ballooning, a new S&P Global Ratings report warns, and it’s only going to get worse.

Last year, total unfunded liabilities across all states increased $63 billion or 10 percent. That’s the third year in a row that post-employment benefit liabilities other than pensions (OPEB) have risen sharply.

While S&P says the increases are partly due to some accounting rule changes that have the effect of bumping up the figures, the main culprits are “continued extensive underfunding” and longer life expectancies.

The reason it will get worse is that unlike pensions, most states don’t try to pre-fund their OPEB liabilities, which S&P says leaves annual budgets vulnerable to volatility and demographic risks associated with aging populations. “Plans that do not address OPEB costs in a timely manner," according to the report, "may be exposed to large future swings in contributions and an increased likelihood that rapidly increasing benefits become unaffordable.”